Stocks closed higher for a third consecutive session Thursday, with the Dow up by triple digits after upbeat earnings from two blue chips, as investors weighed the latest developments on the trade front after President Donald Trump appeared to target Chinese telecommunications group Huawei Technologies Co. with an emergency declaration against threats to U.S. technology.
Meanwhile, economic data on the U.S. labor and housing markets came in better than expected, offsetting worries over trade.
How did the major indexes fare?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.17% rallied 214.66 points, or 0.8%, to 25,862.68, and the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.06% climbed 25.36 points, or 0.9%, to 2,876.32. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -0.87% rose 75.90 points, or 1%, to 7,898.05.
What drove the market?
Global equities have proven resilient after the Trump administration fired a fresh salvo in a trade spat with China late Wednesday, issuing an executive order that bans telecom equipment from countries considered “foreign adversaries.” The move appeared to target Huawei, which has been under pressure from the White House for months.
Additionally, the Commerce Department said that it would add Huawei to a list of entities that engage in “activities contrary to U.S. national security and/or foreign policy interests,” which could greatly restrict its purchases of crucial American-made chips.
Other corners of the Trump administration were offering reasons for markets to hope that a U.S.-China trade deal of some sort was still in the offing. Treasury Secretary Steven Mnuchin said Wednesday that U.S. officials would “most likely” meet with Chinese delegates again in Beijing after each side fired off trade tariffs at the other earlier this week.
A spokesman for China’s Commerce Ministry said the country opposes other countries imposing unilateral sanctions on Chinese entities and that Washington should avoid actions that adversely affect China-U.S. relations, Reuters reported . The spokesman also said he had no information on plans for a U.S. trade delegation to visit China.
On the economic front, the number of Americans applying for jobless benefits fell by 16,000 in the week ended May 11 to 212,000, below the 217,000 expected by economists polled by MarketWatch.
Construction of new homes rose 6% in April from the month earlier, to an annual rate of 1.24 million, above the 1.21 million pace expected by economists, per a MarketWatch poll.
The Philadelphia Fed’s manufacturing index rose to a four-month high in May, reaching 16.6, after registering 8.5 in April.
Federal Reserve Gov. Lael Brainard said Thursday that the “new normal” of low interest rates requires the central bank to allow inflation to pick up and use tools like increased capital requirements to check financial market exuberance. “In today’s new normal, it is important to achieve inflation and inflation expectations around our 2% target on a sustained basis while guarding against financial imbalances through active use of countercyclical tools,” she said at a tax association meeting.